Categories
Uncategorized

Gift or Lump of Coal: U.S. Cross-border Tax Changes Won’t Be Home for Christmas

As 2021 comes to a close, countries are moving toward harmonizing tax rules for multinationals, but stalled talks on the Build Back Better Act (BBBA) in the United States means new uncertainties for a global agreement and for taxpayers. Despite the 2017 U.S. tax reform serving as inspiration for current discussions of a global minimum […]

Categories
Uncategorized

The Interest Limitation Pile-On

How should tax policy treat interest expenses? Historically, corporate income tax systems in the U.S. and around the world have allowed businesses to deduct their interest paid. As Congress contemplates adding a new worldwide interest limitation rule as part of the Build Back Better Act (BBBA), it is useful to consider the potential effects of […]

Categories
Uncategorized

Reviewing How TCJA Impacted Mortgage Interest and State and Local Tax Deductions

Two major provisions in the federal tax code have been limited since the Tax Cuts and Jobs Act (TCJA) of 2017: the state and local tax (SALT) deduction and the home mortgage interest deduction (MID). Limiting the two provisions helped broaden the tax base, offsetting tax revenue loss from reduced tax rates. The limitations are […]

Categories
Uncategorized

2017 Tax Changes Increase the Benefit of Uncapping SALT Deductions for High Income Taxpayers

As policymakers weigh whether to lift or repeal the $10,000 cap on state and local tax (SALT) deductions enacted by the Tax Cuts and Jobs Act (TCJA), they have to wrestle with how that change would primarily benefit high-earning taxpayers. As some have pointed out, other TCJA changes may further increase the benefits of an […]

Categories
Uncategorized

How Heavily Taxed Are U.S. Multinationals?

Recent proposals from the Biden administration and congressional Democrats aim to hike taxes on the foreign profits of U.S. multinationals, resting on the claim that U.S. multinationals pay very low tax rates on these foreign profits. But how heavily taxed are they, and how would various proposals affect these tax rates? U.S. multinational enterprises (MNEs) […]

Categories
Uncategorized

Tax Foundation Comments on the Wyden, Warner, Brown Discussion Draft

Introduction Tax Foundation welcomes the opportunity to offer comments on the Wyden, Warner, Brown discussion draft on international taxation. Tax Foundation is a nonprofit think tank based in Washington, D.C., and our mission is to improve lives through tax policies that lead to greater economic growth and opportunity. We use the four principles of simplicity, […]

Categories
Uncategorized

Temporary Policies Complicate the Child Tax Credit’s Future

Over the next ten years, the structure of the Child Tax Credit (CTC) is scheduled to change, complicating efforts to extend enhanced Child Tax Credit benefits or reform the Child Tax Credit for the long-term. Rather than take an all-or-nothing approach or kick the can down the road by relying on temporary expansions, lawmakers could consider […]

Categories
Uncategorized

GILTI of Neglecting Losses

Sometimes the more you learn about a tax policy, the more it confuses you. Many times, the confusion lies between the intent of the policymakers and what really happens. Often, it’s when important issues were overlooked when the policy was being designed. Such is the case for U.S. companies that run losses on their domestic […]

Categories
Uncategorized

Expense Allocation: A Hidden Tax on Domestic Activities and Foreign Profits

The U.S. corporate tax code is a complicated behemoth, loaded with numerous arcane provisions—some of these providing special tax breaks, others imposing special tax penalties. Among the latter group, indirect expense allocation rules penalize domestic activities and impose a hidden surtax on foreign profits. While arcane, expense allocation rules are relevant to current debates because […]

Categories
Uncategorized

Analysis of Sen. Wyden’s Pass-through Deduction Proposal

Senator Ron Wyden (D-OR) recently introduced the Small Business Tax Fairness Act—the impact of which we modeled—to reform the Section 199A pass-through business deduction created in the Tax Cuts and Jobs Act (TCJA) of 2017. The provision currently allows taxpayers to deduct up to 20 percent of their qualified business income from their taxable income, […]